Trakx Weekly Update: January 13

Key Crypto Market Figures

CTIs Weekly Performance

After a strong first week, crypto decided to do its best impression of a yoyo as a confluence of negative developments impacted the asset class last week. As a result, the Trakx benchmark Top10 Crypto CTI fell 7% over the period. The best performer during this bout of weakness was the typically defensive Inflation Hedge CTI, whose value was unchanged. By contrast, the bottom rung of the performance ladder was taken by the Meme CTI – the prior week’s star performer – after it slipped 24%, a weekly drop in keeping with this index’s generally leveraged beta nature.

Silk Road Sales

One factor that contributed to price weakness in the leading cryptocurrencies was the US government gained approval from the courts to liquidate almost 70,000 Bitcoin (worth some $6.5bn) seized from the Silk Road marketplace over a decade ago. The concern amongst some crypto investors is that such sales would generate downward pressure on prices as investors would need to be incentivized to absorb token supply above and beyond the regular block reward. That said, it is unclear whether the sales will actually materialize given the decision occurred just over a week prior to Trump – the pro-crypto candidate, who backed the establishment of a US strategic Bitcoin reserve and pledged to free Silk Road founder Ross Ulbricht on day one of his second term – returning to the Whitehouse.

Strong US Jobs Report

Also weighing on demand for digital assets was a much stronger than expected US non-farm payroll data. According to last Friday’s report, the US economy added 256,000 jobs in December. This increase was sufficient to push the jobless rate down to 4.1%, which paints a picture of a jobs market that is more robust than previously anticipated by investors. Following its release, the majority of investors believe the next Fed rate cut will not occur before the October FOMC meeting, a shift in monetary policy expectations that kept US bond yields on a rising trend and put risk assets, including crypto, firmly on the back foot.

Another Pro-Crypto G7 Leader?

After almost a decade in office embattled Canadian PM Justin Trudeau last week announced he was stepping down as both head of the Canadian government and as leader of Liberal Party once a new party leader is selected on March 9th. His announcement was not entirely unexpected. His former deputy unexpectedly resigned in December and the Liberals are widely expected to lose the next general election (due by October 20th) given they have been consistently trailing the opposition Conservative Party in the polls by over 20 points.

The significance for digital assets is that the leader of the Conservatives, who is odds on favourite to become the PM after the election, Pierre Polievre has previously disclosed he personally holds cryptocurrencies and is a champion of “sound money” – a phrase often heard in crypto circles to differentiate between fixed supply tokens, like Bitcoin, and fiat money’s flexible supply. As mentioned above, with Trump set to take office in barely more than a handful of days, the prospect of two G7 nations being headed up by crypto advocates points to a substantially more favourable political regime in North America than has been the case for the entirety of the asset class’s life – a long-term bullish development were it to occur.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• US Court Greenlights Sale of $6.5B in Seized Silk Road Bitcoin: Decrypt
• Pro-crypto Pierre Poilievre leads Polymarket odds to become Canada’s next prime minister, replacing Justin Trudeau: The Block
• U.S. Added 256K Jobs in December, Blowing Past 160K Estimate: CoinDesk
• Ethereum and Solana staking no longer classified as collective investment schemes in the UK: CryptoSlate
• XRP price eyes 60% gain ahead of Gary Gensler’s SEC exit: CoinTelegraph

Trakx News

• The next Trakx CGP Seminar will be held in Lyon on January 21. To register please click here

Trakx CTIs Performance

Sources: Coingecko and AlphaVantage

*Return of bitcoin is calculated since 01/05/2020, while CTIs performances were calculated since their respective launch date.
**Includes simulated performance.
***The risk signal is determined according to the historical volatility level, the higher the riskier.

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Disclaimers: No Investment Advice. Index returns and statistics are for illustration only. Index returns do not reflect any transaction costs or expenses. Past performance does not guarantee future results. The information provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the newsletter content as such. Trakx.io does not recommend that any cryptocurrency should be bought, sold, or held by you. Readers shall conduct their own due diligence and consult their financial advisors before making any investment decisions.